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CS Professional · Drafting, Pleadings and Appearances · Types of Documents

Sunil Ltd is sued on an agreement that was insufficiently stamped. The court impounds it. The other side offers to pay the deficit duty and penalty. A drafter must advise on the general position under stamp law as applied in India. Which statement is correct?

An insufficiently stamped instrument is not admissible in evidence until the deficit duty and the prescribed penalty are paid. Once these are paid, the court can admit it. The defect is therefore curable, not fatal, though the document cannot be acted upon before payment.

  1. AAn instrument not duly stamped is inadmissible in evidence until the deficit duty and penalty are paid, after which it may be admittedCorrect
  2. BAn insufficiently stamped instrument can never be admitted, even after paying duty and penalty
  3. CAn insufficiently stamped instrument is admissible as such, and the stamp deficit is recovered only after judgment
  4. DThe court must return the instrument to the parties, and no penalty can be levied

Explanation

Under stamp law an instrument not duly stamped cannot be admitted in evidence or acted upon unless the proper duty and the prescribed penalty are paid. Upon payment, the instrument is admitted, subject to the law applicable to the instrument. Option 2 is wrong as the defect is curable.

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